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Making Berlin the next start-up hub

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Factory has 24 companies in its space, including global players like Soundcloud

The large co-working space is supported by Google and KPMG

It's the business buzzword that's helping to change the global economy: Start-up. But in Berlin, the start-up world is still shaping up.

Simon Schaefer is the founder of Factory, a 16,000-square-meter co-working space in Berlin designed to cultivate entrepreneurship. Factory allows small start-ups to work on the same campus as more established tech companies, providing a "playground for entrepreneurs and innovators."

CNN spoke with Schaefer to find out how Factory is facilitating start-ups and the burgeoning Berlin tech scene.

CNN: How many start-ups are currently working at Factory?

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Tech start-ups call Berlin home02:41

Simon Schaefer: Right now we have about 25 companies here on the premises. The big and important difference between other work spaces and us is that we're stage agnostic so we have later-stage companies or established companies like Mozilla, local heroes like Soundcloud or Wunderkinder, which are role models for younger founders to look up to.

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Making Berlin the next start-up hub

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Making Berlin the next start-up hub02:57

CNN: How does Berlin's start-up environment compare to the likes of Silicon Valley?

SS: If you compare Berlin to other ecosystems, it's very early stage. And it needs time the most, and collective know-how. And getting companies from different stages and having them work with each other is much, much easier with proximity and bringing people together in one place.

CNN: What advice do you have for others who are starting a business?

SS: I think what you should do is look at the individual stages of development of the company. If you're an angel or seed-stage, it's rather simple. You get feedback on your product and you get the chance to test your ideas with your peers. If you're in a later stage company, I think you quickly realize that growth changes you.

And so I think not only do the founders of those companies invest and engage with early-stage companies, but also they still have to touch base with what they were like a few years ago. I think it's always important to have that visually in front of you, to be aware of what it really means to be a small, flexible team.

CNN: Why did you choose to invest in start-ups?

SS: Quite frankly [Factory is] a €22 million ($28 million) investment and it's entirely brought together by five individuals. If you look at real estate as a business, start-ups are probably your worst clients. Because if it works really well, they outgrow the space quickly. And if it doesn't work at all, you'll hear from them when there's a lot of rent left to be paid. So it was very difficult to create a concept around the dynamism of start-up culture.

And I think we've succeeded by being very flexible and having short-term and long-term spaces for their individual stages.

There's a lot of interesting momentum in Berlin and we're trying to capture that in one place. So for anyone who wants to be part of that movement, it would make sense to be here.